BUL Unit 14

Which of the following section of the Uniform Commercial Code governs the sale of securities

Article 8

The theory under which courts pierce the corporate veil of corporations whose shareholders do not treat the corporation like a separate legal identity is the ____ theory.

Alter ego

The rules that govern the corporation, including the number of directors it will have, the method of electing directors, the time and place of shareholder meetings, etc., are found in the corporation's ____ .

By laws

The document that the state issues evidencing that a corporation has been duly formed is the corporation's ____ .

Charter

Minority shareholders have the best chance of electing directors in a corporation that uses the ____ method of voting.

Cumulative

DEF Corporation, which is incorporated in Maryland, is a ____ corporation in Maryland.

Domestic

A corporation is a person for purposes of the due process clauses of the 5th and 14th Amendments.

True

A promoter has a fiduciary responsibility toward the prospective corporation.

True

A shareholder who holds watered stock is potentially liable to the creditors of the corporation should the corporation become insolvent and unable to meet its obligations.

True

Boards of directors normally have the power to purchase insurance to indemnify directors who are sued personally for corporation-related actions.

True

Directors are fiduciaries of the corporation and may have liability in both contract and tort.

True

If a directo discovers illegal acticity he or she must report the activity or problem, and if the officers of the corporation refuse to take action, the director must resign and notify the appropriate authorities.

True

In a closely held corporation, shareholders owe each other substantially the same fiduciary duties that partners owe one another.

True

In most states corporations can have perpetual existence.

True

Shareholders are entitled to notice when a special meeting is called.

True

Some states use the alter ego theory to require corporations to assume liability for contracts negotiated on their behalf by the promoters.

True

States have statutes of limitations limiting the time after the dissolution of a corporation when creditors of the corporation may sue former shareholders on corporate debts.

True

The agreement to purchase stock in a future corporation is a pre-incorporation subscription.

True

The business judgment rule protects directors who are loyal and careful from liability for business decisions that result in loss to the corporation.

True

The director's duty of loyalty continues after the director's resignation.

True

Acts of a corporation that goes beyond the powers granted to it by the state or in its charter are ____ acts.

Ultra vires

The merger that creates the greatest number of antitrust issues is a ____ merger.

Horizontal

Shares that are issued with a face value are

Par-value shares

Dominant shareholders in closely held corporations who exploit their control of the corporation to benefit themselves at the expense of minority shareholders are guilty of

Oppressive conduct

The prerogative of existing shareholders to buy new issues of stock in the same proportion as their current holdings is their ____ right.

Preemtive

When a corporation dissolves, holders of ____ stock have priority in the distribution of corporation assets.

Preferred

The document that is written evidence of an ownership interest in a corporation is an ____

Stock certificate

Instead of giving shareholders a cash dividend, ABC Corporation gave each shareholder 2 shares of a new stock issue for each share of stock the shareholder already owned. This is an example of a ____ .

Stock dividend

Which of the following would not be grounds for dissolving a corporation?

The corporation has not made a profit or declared dividends in two years.

A corporation ceases to exist as a legal entity when

The state issues a certificate of dissolution

A director's duty of care under the business judgment rule is a lower standard that that of profesioal negligence.

False

Any money recovered in a successful derivative suit belongs to the shareholder who initiated the suit.

False

Courts will allow creditors to pierce the corporate veil of any corporation that has only one shareholder.

False

Directors and shareholders may vote by proxy.

False

Directors may vote on matters in which they have a personal interest.

False

Directors must be compensated for their services.

False

Partnerships are required to give notice to creditors when they dissolve, but corporations are not required to give notice of their dissolution.

False

Shareholders have virtually unrestricted access to corporate books and records

False

Stock which has no stated value when it is sold is ____ stock.

No par value

Preferred stock that is entitled to receive only the stated preferred dividend and no other is ____ preferred stock.

Non-participating

A shareholder who cannot attend a shareholder meeting may give another person the right to vote her shares in that election. This temporary grant of authority is an ____ .

Proxy

States have the power to cancel or revoke the charters of corporations that engage in illegal activities. These forfeiture hearings are called ____ proceedings.

Quo warranto

The person who is designated to receive notices and service of process for a corporation is its

Registered Agent

Which of the following is FALSE about the name of a corporation?

The name can never be changed once it is registered with the state.